Private sector wages on the rise

Private sector workers in the UK have enjoyed slightly higher wage increases than their public sector counterparts during the first few months of 2004, according to figures released this week.

Over the past two years, pay increases in the public sector were largely ahead of the private sector. However, the latest analysis of pay settlements from pay specialists Incomes Data Services (IDS) shows this relationship is currently being reversed.

Most private sector increases in the first months of 2004 have been in the 3 to 3.5 per cent range, while the dozen or so public sector increases have been in the 2.5 to 3.3 per cent range. Overall the median increase for the first quarter of 2004 is 3.2 per cent, up from 3.0 per cent in the final quarter of 2003.

Treasury policy is looking for lower public sector pay increases in 2004 and most of the increases set so far for April 2004 are lower than last year, with 2.5 per cent for teachers, 2.4 per cent for prison staff and 2.8 per cent for the armed forces.

Meanwhile increases in the private sector have risen slightly, with the majority ahead of the (all items) inflation rate of 2.6 per cent.

There is no sign of negotiators taking much notice of the Chancellor's new inflation measure, the CPI, which is currently 1.4 per cent.

Greater economic buoyancy and confidence seems to be feeding through into private sector settlements. There are fewer pay freezes and there is a larger proportion of deals in the 4 to 6 per cent range.

IDS added that this rise could herald a pick-up in wage pressures as the UK's economic outlook strengthens.